The Ramaphosa effect in real estate
Here are the Cyril Ramaphosa presidency’s most significant economic actions during his first three months in office and how they have affected the real estate market in South Africa, which has been fairly stagnant up until now.
The Ramaphosa effect in real estate
President Cyril Ramaphosa and his economic team have made big pledges about economic and political reform and acted quickly to boost investor confidence and wipe out corruption in the public and private sector. For the first time since the recession, more South Africans felt positive about the economy than negative about it as the rand ended its losing streak against major foreign currencies, inflation and interest rates went down and global ratings agency, Moody’s, spared us another credit rating downgrade.
These were also the economic forces that enabled the property market to start the year on a positive note. For sellers, there wasn’t that much time lapsing between the day they list their property for sale and the final closing date. Houses spent less time on the market in the first quarter of 2018, declining from the previous quarter’s 17 weeks and 2 days to 14 weeks and 1 day. Buyers had greater mortgage borrowing power as the average home loan size they received from banks were 6,05% higher than it was 12 months ago.
But, was it a case of all good things come to an end for the property market? Many market observers believe the Ramaphosa effect is wearing down and that it will affect confidence levels in the property market. The latest statistics, however, bring both good and bad news. While ABSA’s Homeowner Sentiment Index shows that positive property-buying sentiment in Q2 dropped to 61% from 70% in the first quarter, the latest RE/MAX National Housing Report reveals that the market improved by 19.4% on the previous quarter.
The property landscape in South Africa is improving, but the market is still a long way from making the recovery sustainable and will need greater political and economic stability to reach its full potential.
